Navigating the SBA's 2025 Reforms: What Englewood Entrepreneurs Need to Know

The U.S. Small Business Administration (SBA) has introduced significant changes in 2025 that will impact small businesses nationwide, including those in Englewood. These reforms aim to streamline operations, enhance financial integrity, and refocus the agency's mission. Here's a breakdown of the key changes and what they mean for our local business community.

🔄 SBA's Organizational Overhaul

In March 2025, the SBA announced a comprehensive reorganization plan, resulting in a 43% reduction of its workforce—approximately 2,700 positions. This move is part of an effort to return to pre-pandemic staffing levels and eliminate programs introduced in recent years, particularly those related to diversity, equity, inclusion, and COVID-19 lending. Essential services like loan guarantees, disaster assistance, and veteran support remain unaffected. Starfield & Smith Attorneys at Law+3Politico+3AP News+3AP News+1Small Business Administration+1

💰 Reinstatement of Traditional Underwriting Standards

The SBA has reversed the "Do What You Do" underwriting framework, reinstating stricter lending criteria to mitigate rising default rates. Effective June 1, 2025, under SOP 50 10 8, key changes include:Congress.gov | Library of Congress+3SBG Funding+3Small Business Administration+3

• Franchise Directory Restoration: Streamlining lender procedures for determining business eligibility.

• Increased SBSS Score: Raising the minimum Small Business Scoring Service score for 7(a) loans from 155 to 165.

• Mandatory 10% Cash Injection: Requiring startups to contribute at least 10% equity.

• Hazard Insurance Requirement: Mandating insurance for loans over $50,000.Congress.gov | Library of Congress+13SBG Funding+13Small Business Administration+13

These measures aim to enhance the financial stability of SBA-backed loans. SBG Funding

🛡️ Enhanced Citizenship and Ownership Requirements

As of March 7, 2025, businesses seeking SBA-backed 7(a) and 504 loans must be 100% owned by U.S. citizens, nationals, or lawful permanent residents. This change may affect eligibility for some Englewood entrepreneurs, particularly those with diverse ownership structures. SBG FundingInvestopedia+1Akerman LLP+1

📉 Adjustments to Loan Limits

Starting June 2025, the maximum loan size for 7(a) small loans will decrease from $500,000 to $350,000. This adjustment focuses SBA resources on truly small businesses, potentially impacting funding strategies for local entrepreneurs. jsettleslaw.com

🏗️ Changes in Government Contracting Rules

The SBA has proposed expanding the "Rule of Two" to include orders under Multiple Award Contracts (MACs). If implemented, this would require contracting officers to set aside certain task orders for small businesses when at least two capable small businesses can perform the work. This change could increase contracting opportunities for small businesses in Englewood. Venable LLP+6Winvale Blog+6SmallGovCon+6

📊 Resetting Small Business Contracting Goals

The SBA has standardized small business contracting goals across federal agencies, setting a minimum of 5% for awards to small disadvantaged businesses. This reset may influence the distribution of federal contracts and underscores the importance of staying informed about contracting opportunities. Federal News Network

🧭 What This Means for Englewood Entrepreneurs

These SBA reforms present both challenges and opportunities:

• Access to Capital: Stricter lending criteria may require more robust business plans and financial documentation.

• Eligibility: Enhanced ownership requirements necessitate a review of business structures.

• Contracting Opportunities: Changes in federal contracting rules could open new avenues for securing government contracts. Winvale Blog

Englewood entrepreneurs should assess how these changes affect their operations and explore resources to adapt effectively.

📞 GECC Is Here to Help

The Greater Englewood Chamber of Commerce is committed to supporting our local businesses through these transitions. We offer resources, workshops, and personalized guidance to help you navigate the evolving landscape.

Stay Connected:

• Website: www.gechamber.com

• Instagram: @ge_chamber

• Facebook: GE Chamber

• LinkedIn: Greater Englewood Chamber of Commerce

For personalized assistance, reach out to us at connect@geccf.org

Together, we can ensure that Englewood's small businesses continue to thrive amid these changes.